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5. (25 points) In 2012 Texas A&M was considering the purchase of 25 new basses to re- vamp the campus transportation fleet. They considered two alternatives. electric buses and diesel busses. The electric bosses had a higher initial cost although part of the cost was offset by a one time tax incentive for electric vehicle purchases (paid at the time of purchase) and they had zero fuel costs. The diesel busses had a lower initial cost but required fuel costs each year. Beyond these differences. the busses were identical (e.g.. they had the same capacity. safety ratings. and weight). Texas A&M used an MARR of 12%. The costs for each vehicle are summarized in the following table: Electric Bus Diesel Bus Initial Cost $1.5 Mil 5950 k Yearly Benefits $500 k 5500 k Yearly Fuel Costs 50 590 k Tax Incentive 525 k $0 Salvage Value $250 k 3275 k Useful Life 8 8 (a) (10 points) Assume that the University decided to purchase the electric busses. Using Present Worth Analysis. analyze if this decision was the correct choice. in your answer you should clearly show the present worth of each alternative (assuming year 0 is 2012). and indicate if the choice was correct and why. (b) (5 points) What are some additional factors that the University might have consid ered in their decision other than financial costs and why are these relevant to the decision? (List at least 2 with rationale) (c) (10 points) Assume that the University decided to not purchase new buses in 2012 and instead voted to revisit the purchase decision in 2017. During this time the tax incentive for electric vehicle purchases was removed but the cost of electric vehicles reduced dramatically. Given the loss of the tax incentive and assuming all other costs and interest rates remain the same. what would the cost of the Electric busses have to be to make the two alternatives equivalent